New KYC Norms

Key changes in the KYC norms, effective January 01, 2012

• In-Person Verification (IPV) – Information provided in the KYC form has to be verified in person by the AMC, its Registrar and Transfer Agent (RTA) or distributors who are AMFI / NISM certified and compliant with Know Your Distributor (KYD) guidelines.
• KYC Application Forms – Some changes have been made in the KYC application form and are listed below for ready reference. Kindly refer to the uniform KYC forms posted on the AMFI website or on www.cvlindia.com
  
  

  Individual investors:

  • Marital status to be provided.
  • Proof to be submitted for PAN exempt investors has been listed.
  • Income details – the slabs have been modified and an option of providing net worth as on a recent date in lieu of gross annual income has been provided.
  • Proof of Address and Identity – there are some changes in the list of acceptable documents.

  Non-individual investors:

  • Place of incorporation, date of commencement of business have been added.
  • Income details – the slabs have been modified, and additional information on the net worth as on a recent date has been sought. Proof to be submitted for PAN exempt investors has been listed.
  • Following details of Promoters / Partners / Karta / Trustees / Whole time directors are required: Name, PAN with proof, DIN (for directors) / UID, if any (for others), address proof and photographs.
  • Photograph of any one of the authorised signatories on the KYC application form.
  • Copy of the balance sheets for the last 2 financial years and thereafter to be submitted every year.
  • Copy of latest share holding pattern.

• Exemptions/Clarifications to PAN

  For the following set of customers/transactions, while PAN is not mandatory, KYC requirements are necessary.

  • Investors residing in the state of Sikkim.
  • SIP of Mutual Funds upto Rs 50, 000/- p.a.
  • Transactions undertaken on behalf of Central Government and/or State Government and by officials appointed by Courts e.g. Official liquidator, Court receiver etc.

  Such customers also need to get their KYC done by filling up the KYC forms and all necessary details, in lieu of PAN. The application form from such customer should be accompanied with duly filled KYC form or an acknowledgement of KYC.

• Impact on Investors

  • Existing and new investors who have successfully completed the KYC process with CVL for investments in mutual funds (in the old format) - No action is required and they can continue to use the KYC acknowledgment issued to them for mutual fund investments. However it will not be applicable for investments with other intermediaries in the securities market.
  • Investors who have NOT completed the KYC process with CVL for investments in mutual funds (in the old format) – New uniform KYC norm as explained above is applicable and the KYC acknowledgment issued by the KRA can be used for all investments in securities market, including mutual funds.
  • Investors who have completed KYC process through any of the intermediaries such as DP, PMS, etc., on or after 1st January, 2012 and hold a valid acknowledgement issued by KRA for the same may invest with any of the mutual funds with the same acknowledgement. However, a mutual fund may choose to carry out enhanced due diligence based on its internal client due diligence policy.
  • New KYC form can be submitted by an investor along with an investment application (purchase / additional purchase / switch / SIP mandate forms) and not on a stand-alone basis, as was possible till 31/12/2011. However, an investor who has investments in any mutual fund and is not KYC compliant may submit new uniform KYC form to the mutual fund by quoting the folio number.
  • As per clause 1.iv of the SEBI circular dated December 23, 2011 the intermediary shall carry out KYC when the client chooses to trade / invest / deal through the intermediary. Therefore, it is essential for an intermediary to have the client account opening form duly signed by the investor along with the KYC documents in order to proceed with carrying out the KYC, uploading the KYC information on the system of the KRA, and forwarding KYC documents to the KRA. This may not necessarily be accompanied by a payment instrument for investments which can happen subsequent to account opening.
  • Mutual fund distribution platforms using electronic mode of transaction submission should get the KYC of first-time investors initiated through any of the mutual funds by filling up mutual fund’s account / folio opening form. Once the investor’s KYC gets triggered with a KRA, the investor is free to transact with any mutual fund.

• In-Person Verification (IPV) and Document Verification/Attestation:

  1. IPV and Document Verification shall be conducted only by the following:
     
     
     1. Employees of AMC
     2. RTA appointed by the AMC
     3. KYD Compliant Distributors, with valid ARN
     4. Authorized official of a scheduled commercial bank, only in case of Direct applications
  2. The following needs be recorded on the KYC form:
     
     
     1. Name of the person doing attestation of documents/IPV, his designation, organization, his signatures and date of IPV
     2. ARN code and name of the distributor in case of attestation/IPV done by a valid ARN holder
  3. Where IPV/Document verification is done by a sub-broker:
     
     
     1. The sub broker ARN code should be KYD compliant, with valid ARN
     2. The sub broker should additionally affix the following three details on the KYC application form
     3. Sub-broker’s ARN code,
     4. ARN code of the main distributor
     5. Sub broker code allotted to the sub-broker by the main distributor
  4. Attested copies of the KYC documents can be accepted, if the same are attested by the list of people authorised to attest the documents, as mentioned on the KYC forms.
  5. Special note for distributors:
     
     
     1. In case of attestation/IPV done by a sub broker, the main distributor under whose code the folio is opened shall also be responsible for the KYC process, including the IPV, conducted by the sub broker
     2. Distributors undertaking verification of documents and the IPV shall exercise due care and diligence while validating the documents and verifying the identity of the client in-person
     3. Various due diligences to be exercised by the distributors (including sub-brokers who are registered with AMFI) while conducting the KYC process will form part of Code of Conduct prescribed for distributors